Fons Verplaetse died on Thursday evening at the age of 90 after a short illness and the consequences of Covid-19. As Chief of Staff to Prime Minister Wilfried Martens and subsequently as Governor of the National Bank, Verplaetse was the architect of the recovery policy that pulled the Belgian economy out of the morass into which it had ended up in the 1970s and 1980s.
Fons Verplaetse can without exaggeration be called the architect of the macroeconomic recovery policy that put the Belgian economy, badly damaged by the oil crisis of the 1970s, back on track and made Belgium meet the conditions in 1999 to join the European monetary union. As an employee in the study department of the National Bank and later as a member of the cabinet of Prime Minister Wilfried Martens (CD&V), he helped prepare the devaluation of the Belgian franc in 1982, which boosted the competitiveness of the Belgian economy, and worked out accompanying recovery measures.
As governor of the National Bank, he later turned the franc into a strong currency by linking it to the Deutsche Mark. It was a way of inciting Belgian politicians to greater budgetary discipline – at the time Europe was not yet so closely monitoring public finances in the member states – and to greater concern for safeguarding the competitiveness of Belgian companies.
Verplaetse was able to explain complex economic mechanisms in an understandable way, although his juicy dialect language was not always understandable.
Verplaetse was a confidant of the Christian workers’ movement. This enabled him to convince the Christian union to join that path. He was a clever economist who could explain complex economic mechanisms in an understandable way, although his juicy dialect language – he came from the East Flemish Zulte, on the border with West Flanders – was not always intelligible.
Verplaetse, a staff member of the National Bank’s research department, was active in a working group set up at the end of 1980 by some tenors from the Christian Democratic party and workers’ movement to develop a socially acceptable recovery plan for the Belgian economy. It had been disrupted by the oil crisis: inflation galloped, unemployment was high, the government budget was heavily in the red, the national debt was growing alarmingly and Belgian companies were struggling with weak competitiveness on the international markets. This is how CD&V leader Wilfried Martens got to know Verplaetse. When Martens became prime minister again in December 1981, he appointed him Deputy Private Secretary.
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In his country house in Poupehan, Verplaetse repeatedly invited Wilfried Martens, ACV chairman Jef Houthuys and Hubert Detremmerie, chairman of the BAC bank, to prepare austerity measures.
Verplaetse immediately started preparing for the devaluation at the cabinet, although he knew that the National Bank strongly opposed such an intervention. In February 1982, the Belgian franc was devalued by 8.5 percent to make the Belgian economy competitive again. The derailed public finances were then dealt with. In his country retreat in Poupehan, Verplaetse repeatedly invited Martens, ACV chairman Jef Houthuys and Hubert Detremmerie, then chairman of the BAC, the bank of the Christian workers’ movement, to prepare austerity measures. For the next six years, Verplaetse remained Economic Private Secretary to Prime Minister Martens, in various governments.
There are no limits to economies of scale in the financial sector, argued Verplaetse, who advocated bank mergers. History proved wrong on this point in 2008.
In 1988 he was appointed director of the National Bank. A few months later he already became vice-governor. As number two of the National Bank, Verplaetse led a working group that drew up a plan for the restructuring of public credit institutions, such as the Gemeentekrediet – the current Belfius Bank – and the ASLK – which later came into the hands of Fortis and was merged with the Generale Bank. to Fortis Bank. The proposals were never implemented, but since then Verplaetse has regularly repeated that there were too many banks in Belgium, not only public banks but also private ones. He was also a strong advocate for the merger of the Belgian commercial banks Generale Bank and BBL (now ING Belgium) into a major player. That project also failed. “There are no limits to economies of scale in the financial sector,” he argued. History proved wrong on this point in 2008.
Belgium and the euro
In July 1989, Verplaetse became governor of the National Bank. Together with Minister of Finance Philippe Maystadt (CdH), with whom he formed a good tandem, he argued in the following years for a radical reform of the financial landscape. In 1990 he convinced the government to peg the Belgian franc to the Deutsche Mark in order to make the Belgian currency more stable and stronger. This currency peg meant the de facto end of Belgium’s monetary sovereignty.
From 1993 onwards he worked to prepare Belgium for participation in the European monetary union and the euro, which was due to start in 1999. To do this, Belgium first had to contain its inflation and continue to make public finances healthy. Verplaetse gave a helping hand: the National Bank sold some 1,000 tons of its gold reserves and donated the capital gain of nearly 750 million euros to the state to pay off foreign debts.
In January 2017 De Tijd spoke with Fons Verplaetse for the series ‘Back to Poupehan’.
Verplaetse’s performance as governor was occasionally controversial. In 1994, he proposed to bring forward the 1995 parliamentary elections by a few weeks in order to avoid a less serious 1996 budget being drawn up. In this way he wanted to maximize the chances of joining the European currency union. Prime Minister Jean-Luc Dehaene responded promptly, saying that the National Bank should not interfere in politics.
Verplaetse had a hard time with criticism. When an enthusiastic bank economist dared to question Verplaetse’s theses, he urged the top of the bank to call his employee to order.
In 1999 – Verplaetse was 69 at the time – his mandate as governor of the National Bank came to an end. He did not completely abandon it yet. He got an office in an outbuilding of the bank, he continued to analyze macroeconomic statistics and was always ready, as an old wise man, to comment on the state of affairs in the Belgian economy and to give his advice, for those who are still interested in it. used to be. There were fewer and fewer. In the end, Verplaetse was a man of the last century.
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